Northwest Gas (NWN) AI Stock Analysis

• Market Cap: $1.60B
• Dividend Yield: 4.95%
• Average Volume (3M): 269.99K
• Price to Earnings (P/E): 15.8
• Beta (1Y): 0.30
• Revenue Growth: 3.88%
• EPS Growth: 11.80%
• Country: US
• Employees: 1,452
• Sector: Utilities
• Sector Strength: 79
• Industry: Regulated Gas
• EPS (TTM): 2.28
• Shares Outstanding: 40,309,760
• 10 Day Avg. Volume: 283,688
• 30 Day Avg. Volume: 269,988
• PEG Ratio: -23.95
• Price to Book (P/B): 1.37
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -8.42
• Enterprise Value/Market Cap: 2.04
• Enterprise Value/Revenue: 0.70
• Enterprise Value/Gross Profit: 5.95
• Enterprise Value/Ebitda: 2.24
• 1Y Price Target: $48.00
• Price Target Upside: 21.15% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3

• Rating: 71 Outperform
• Price Target: $45.00 ▲(13.58%Upside)

NWN's overall score reflects a stable financial standing with consistent revenue and profitability, supported by sound technical indicators and reasonable valuation metrics. The company's strategic acquisitions and projected growth enhance its long-term prospects, yet regulatory challenges and high capital expenditures pose risks to near-term earnings.

Positive Factors

Acquisition Impact

NWN completed the acquisition of SiEnergy, which increased revenue more than expected.

Customer Growth

NWN's natural gas customer growth in Oregon and Washington was higher than forecasted.

Earnings Guidance

NWN introduced 2025 GAAP EPS guidance that is significantly higher compared to the previous forecast and consensus.

Negative Factors

Debt Levels

NWN's debt-to-capital ratio increased to 61.3%, up from 57.6% in the prior quarter.

Dilution Concerns

NWN expects the SiEnergy acquisition to be 'modestly dilutive' in 2025.

Future EPS Growth

The analyst maintains a Hold rating due to expected future dilution, which may lead to lower EPS growth in coming years.

Northwest Gas Business Overview & Revenue Model

Company Description

Northwest Natural Holding Company, through its subsidiary, Northwest Natural Gas Company, provides regulated natural gas distribution services to residential, commercial, industrial, and transportation customers in Oregon and Southwest Washington. The company also operates 5.7 billion cubic feet of the Mist gas storage facility contracted to other utilities and third-party marketers; offers natural gas asset management services; and operates an appliance retail center. In addition, it engages in the gas storage, water, non-regulated renewable natural gas, and other investments and activities. The company provides natural gas service through approximately 786,000 meters in Oregon and southwest Washington; and water services to a total of approximately 80,000 people through approximately 33,000 water and wastewater connections in the Pacific Northwest and Texas. Northwest Natural Holding Company was founded in 1859 and is headquartered in Portland, Oregon.

How the Company Makes Money

Northwest Gas generates revenue primarily through the sale and distribution of natural gas to its customer base, which includes residential, commercial, and industrial users. The company charges customers based on the volume of natural gas consumed, typically measured in therms, and adjusts pricing according to market rates and regulatory guidelines. In addition to direct sales, NWN may also benefit from infrastructure investments, such as pipeline expansions or upgrades, which can enhance service reliability and attract new customers. The company may form strategic partnerships with other energy providers or technology firms to leverage advancements in energy efficiency or renewable energy integration, potentially creating additional revenue streams. Regulatory frameworks and state energy policies also play a significant role in shaping Northwest Gas's pricing and revenue strategies.

Northwest Gas Financial Statement Overview

Summary

NWN exhibits steady revenue growth and sound operational efficiency, supported by solid margins. The balance sheet shows sustainable leverage levels, although reliant on debt. Cash flow performance highlights strong cash generation but is overshadowed by negative free cash flow. Overall, NWN maintains a stable financial position with areas for improvement in cash management.

Income Statement

NWN shows a consistent revenue growth trajectory with the latest TTM revenue growth of 5.3%. The gross profit margin has improved to 45.1% TTM, reflecting enhanced cost management. However, net profit margin remains moderate at 8.5% TTM. EBIT and EBITDA margins are healthy at 19.4% and 33.5% TTM, respectively, indicating stable operational efficiency.

Balance Sheet

The debt-to-equity ratio stands at 1.64, indicating a moderate level of leverage. Return on equity is solid at 7.1% TTM, suggesting effective utilization of shareholder funds, while the equity ratio is 25.5%, which is typical for the industry. The balance sheet reflects a stable financial position, though with a reliance on debt financing.

Cash Flow

Operating cash flow to net income ratio is robust at 2.48 TTM, demonstrating strong cash conversion. However, free cash flow remains negative, posing a concern for liquidity. The negative free cash flow growth rate of -17.8% from the previous period raises caution on capital expenditure management and cash reserves.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
1.21B	1.15B	1.20B	1.04B	860.40M	773.68M
	Gross Profit
547.79M	418.16M	423.87M	341.23M	329.12M	300.50M
	EBIT
235.67M	191.14M	184.94M	167.48M	163.12M	148.35M
	EBITDA
407.09M	348.09M	344.49M	303.37M	264.09M	238.09M
	Net Income Common Stockholders
102.96M	78.87M	93.87M	86.30M	78.67M	76.78M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
100.05M	38.49M	32.92M	29.27M	18.56M	30.17M
	Total Assets
5.71B	5.23B	4.87B	4.75B	4.06B	3.76B
	Total Debt
2.39B	1.96B	1.75B	1.68B	1.52B	1.34B
	Net Debt
2.29B	1.92B	1.71B	1.65B	1.50B	1.31B
	Total Liabilities
4.25B	3.85B	3.58B	3.57B	3.13B	2.87B
	Stockholders Equity
1.46B	1.39B	1.28B	1.18B	935.15M	888.73M
Cash Flow		Free Cash Flow
-159.51M	-194.12M	-47.40M	-191.69M	-134.90M	-137.87M
	Operating Cash Flow
254.85M	200.28M	279.95M	147.67M	160.35M	143.02M
	Investing Cash Flow
-721.47M	-428.99M	-335.50M	-435.46M	-300.12M	-294.28M
	Financing Cash Flow
484.35M	227.06M	64.21M	301.63M	131.44M	171.78M

Northwest Gas Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 39.62
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NWN, the sentiment is Negative. The current price of 39.62 is below the 20-day moving average (MA) of 40.28, below the 50-day MA of 41.44, and below the 200-day MA of 40.20, indicating a bearish trend. The MACD of -0.48 indicates Positive momentum. The RSI at 38.85 is Neutral, neither overbought nor oversold. The STOCH value of 29.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NWN.

Northwest Gas Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
SR	73 Outperform	$4.27B	17.87	7.30%	4.31%	-7.10%	2.54%
NWN	71 Outperform	$1.60B	15.76	7.36%	4.95%	3.88%	11.80%
NJR	71 Outperform	$4.45B	10.74	17.83%	4.06%	20.30%	63.69%
SWX	68 Neutral	$5.32B	23.71	6.49%	3.35%	-10.78%	16.27%
CPK	67 Neutral	$2.81B	22.26	9.04%	2.28%	20.41%	13.64%
OGS	65 Neutral	$4.30B	17.33	8.08%	3.72%	7.73%	2.36%
Sector *	64 Neutral	$8.53B	10.30	4.25%	5.88%	4.06%	-12.76%

Northwest Gas Corporate Events

Northwest Gas Reports Strong Q1 2025 Financial Results

On May 6, 2025, NW Natural Holdings reported strong financial results for the first quarter of 2025, with earnings per share increasing to $2.18 from $1.69 in the same period of 2024. The company completed the acquisition of SiEnergy, a Texas-based gas utility, in January 2025 and signed an agreement to acquire Hughes Gas Resources, further expanding its Texas operations. NW Natural Holdings reaffirmed its 2025 adjusted EPS guidance and long-term growth targets, highlighting its strategic focus on expanding utility services and maintaining shareholder value. The company also declared a quarterly dividend, emphasizing its commitment to returning value to shareholders.